This is a 4-Part Series on Medicaid Planning and the Lookback
What Does Medicaid Look At During the Lookback?
During the lookback period, the county caseworker can ask for a lot of documentation. Typically, that includes things like:
- Bank statements and check copies
- Large ATM or cash withdrawals
- Wire transfers or Zelle/Venmo-type payments
- Transfers of your home or other real estate
- Changes in account ownership (adding a child to your account, for example)
- Money moved into certain trusts
- Gifts to children, grandchildren, or anyone else
The big question is always:
“Did you receive something of equal value in return?”
If you didn’t, it’s usually treated as a gift or uncompensated transfer.
What Doesn’t Typically Count as a Problem?
Not every transaction during the last five years is an issue. Examples that are usually fine (assuming they’re properly documented):
- Paying your own regular bills (utilities, taxes, insurance, groceries, medical expenses)
- Buying things for you (home repairs, car, necessary personal items)
- Certain transfers between spouses
- Payments to properly documented caregivers under written agreements (if set up correctly)
- Assets placed into properly structured third-party trusts (when someone else is setting up a trust for you)
The tricky part? What looks “normal” to you may not look normal to a Medicaid caseworker. That’s where good counsel and clean documentation matter.
What Happens If Medicaid Finds a Problem Transfer?
If Medicaid finds that you gave away assets or transferred them for less than fair market value during the 5-year window, they calculate a penalty period – a number of months during which Medicaid will not pay for your long-term care, even if you otherwise qualify.
Very simply:
- They total up the value of the gifts/transfers in the last 5 years.
- They divide by a state-set number that represents the average monthly cost of nursing home care.
- The result is the number of months you are penalized.
During this penalty period, you or your family must privately pay for care. That’s why last-minute gifting (or DIY transferring of the house to the kids) can be so dangerous.
**** This post is not legal advice. Please seek qualified legal advice from an Attorney when handling potential estate planning or medicaid planning. ****
Stay tuned for Part 3 where we discuss A Medicaid Asset Protection Trust (MAPT)
If you're looking for more information about Estate Planning or Medicaid Planning or Asset Protection, contact an experienced Estate Planning Attorney, Simon Law Group LLC for a free consultation by calling 800-709-1131 or TEXT us at 908-864-4450
